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Expanding and Enhancing Customer-Level...Expanding and Enhancing Customer-Level Billing Analysis:...
Transcript of Expanding and Enhancing Customer-Level...Expanding and Enhancing Customer-Level Billing Analysis:...
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http://efc.sog.unc.edu
@EFCatUNC
Expanding and Enhancing Customer-Level Billing
Analysis: Non-Residential Customer Sales Profiles and
Resilient Pricing Structures and Modeled
Shadi Eskaf and Jeff Hughes
Environmental Finance Center at UNC School of Government
Presentation to the UWC – September 4, 2015
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Two Analyses: One Project
Non-Residential Sales Profile
• OWASA
• Fayetteville PWC
• Greensboro Water
• Town of Cary
Alternative Rate Models for
Residential Customers
• OWASA
• Fayetteville PWC
• Town of Cary
• Charlotte Water
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Acknowledgements
3
North Carolina
Urban Water Consortium
Cary, Charlotte Water, Fayetteville PWC, Greensboro, OWASA
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NON-RESIDENTIAL* SALES PROFILES * INCLUDING MASTER-METERED MULTI-FAMILY CUSTOMERS
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Approach and Outputs
• 4 utilities, individually:
– Meetings and discussions; input into the analysis
– Interactive historical sales profile
– Interactive historical top ten customers profile
– Analysis (and list) of customers that significantly changed LT demands
• Report to the UWC with cross-utility takeaways:
– How do utilities treat non-residential customers differently?
– Why it is important to understand non-residential customers?
– How can utilities better understand their non-residential customers?
Report will also be published by Journal AWWA in January 2016
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Utilities can Profile their Non-Residential
Customers by Water Usage Metrics
Demonstration of Utility-Specific “Non-Residential Dynamic Dashboard”
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Number of Non-Residential Customer Classes
OWASA: 14 (unique for UNC)
Fayetteville PWC: ~10 (unique for PWC operations)
Cary: >20
Greensboro: 3 (use meter size instead)
Consolidated into fewer rate classes
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Non-Residential Customers Use a Lot of Water
(and pay a lot for water)
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Big Data Can Assist Efforts in Resource and
Financial Planning and Customer Service
• “Key Accounts”
• Plateau Analysis
• Meter Right-Sizing
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Key Accounts: Top 1% of customers pay ~25% of total charges
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Interactive “Top Ten” Customers Dashboard
Mete
r num
be
rs (
hid
den
)
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Customer Plateau Analysis
While fewer non-residential customers down-plateaued than up-plateaued,
they reduced water use significantly more
Identifying which customers significantly increased LT water demand (up-plateaued) or
significantly decreased LT water demand (down-plateaued)
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Meter Right-Sizing
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Takeaways for the UWC:
Billing Data – a Gold Mine of Information!
• Mining the customers’ billing data individually can assist
efforts in water resource management, financial planning,
customer service, and outreach
• Identifying and working with key accounts
• Understanding why and how non-residential customers
are changing demand patterns
• Detecting anomalies to investigate billing errors or better-
sizing of meters
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Possible Areas of Future Work
• Integration of customer profiling with the billing system
• Development of new considerations for rates analyses
– E.g.: proportions of use and charges by customers with certain water-using behaviors (peakers, hidden irrigators, plateauers, etc.)
• Detailed analysis of specific types of customers
– Cooling towers
– Multi-family residential customers
– Customers that sub-meter and charge beyond the meter
– Down-plateauing non-residential customers
• Analysis of customer types by customer characteristics using NAICS codes, GIS, parcel type, or other supplemental data
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ALTERATIVE RATE MODELS FOR
RESIDENTIAL CUSTOMERS
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Why New Rate Models?
Because the Status Quo Does Not Work for Everyone
• Traditional rate structures create a paradoxical
relationship between conservation and financial health
• Water utility variability does not match utility cost
variability
• There is a large national infrastructure gap
• Weather is becoming less predictable
• It is much easier to create individualized rates
20
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True or False
• Meters are a reliable predictor of the cost impact a
customer has on their utility?
• Costs vary significantly with the amount of water you sell?
• Customers understand their rates?
• You are confident that you understand what drives
customer behavior?
• There are many utilities that rely on historic usage rather
than current monthly usage to determine monthly bill
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Research Shows…..
• All residential 5/8” meters are not created equal (Boyle et al, 2011)
• Total bill amount has a bigger impact on customer consumption than billing frequency or rate structure (Wichman, 2015)
• Alternative rate structures are arising in the face of big infrastructure projects (Spang et al, 2015)
• Individualized, tailored rates can provide greater customer equity, more stable revenue, and send more accurate price signals to promote conservation. (Teodoro, 2002)
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Research Objectives of Alternative Rate Models
• Increase revenue resiliency in the wake of declining
demands (increase proportion of revenues
obtained from fixed charges)
• Incentivize conservation and peak-shaving
• Address affordability and fairness
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Alternative Rate Modeling for Residential
Customers with UWC Members
• Step 1: Conducted Preliminary Analysis of Four Alternative Rate Models
• Step 2: Reviewed Preliminary Analysis with Utility Staff and Select One
• Step 3: Conducted deep dive into one alternative rate model and its impact on utility and customer finances in one year
– Compared existing rates to alternative rates: effects on utility revenues, effects on customer bills, who pays less or more
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Benefits and Challenges of Alternative Rate Models
Benefits
• Increased revenue stability
• Targets peaking customers
• Reduces bills for low-
peaking/low-users
• More steady bills for
customers
• Potential integration with AMI
technology
Challenges
• Billing software capability
• Customer understanding and
acceptance
• Detrimental impact of leaks
• Dealing with transient
community
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Possible Areas of Future Work
• Research into communication and customer understanding (and acceptance) of alternative rate structures
• Research into current billing feasibility and implementation ease
• Modeling alternative rates with non-residential customers
• Utility pilot programs
• Survey of customers on billing and preferences: how they pay, perceptions, understanding of rates, reactions to financial incentives, their value of water, other utility-selected questions for their customers. Statistically representative.
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http://efc.sog.unc.edu
@EFCatUNC
Environmental Finance Center at UNC School of Government
Jeff Hughes: [email protected]
Shadi Eskaf: [email protected]